Charles Krug Winery investing heavily in future

By Paul Franson

A major revival is occurring at Napa Valley’s oldest winery.

The Peter Mondavi family’s Charles Krug Winery, which was founded in 1861, had been dozing among changing Napa Valley wineries until recently, but it is now undertaking major changes to compete with the best. In the process, it’s basically transforming into two businesses, the high-end Charles Krug Napa Valley line and the popular-priced CK Mondavi fighting varietals.

Peter Mondavi’s father Cesare bought the old Charles Krug Winery in 1943 when he was 60; when he died in 1959, his wife Rosa took over, passing the torch to Peter in 1966. In a well-publicized conflict over the direction of the winery, Peter’s brother Robert was kicked out of the business in the ‘60’s, forming his own unaffiliated winery that has become the flagship for California’s wine business.

While still at Krug, Robert wanted to upgrade the business, feeling he could make world-class wine in Napa Valle, while Peter and Rosa preferred to keep on as they had been. Ironically, what Robert sought is only now happening at Krug, primarily under Peter’s sons: Stanford MBA Peter Mondavi Jr. handles business and marketing at Charles Krug, and UC Davis grad Marc Mondavi heads viticulture and winemaking. They are now deeply involved in the business, though Peter Senior remains active.

A focus on red Bordeaux varieties

Once known primarily for its popular sweetish Chenin Blanc and Riesling, the company is focusing the Charles Krug Napa Valley label on high-end red Bordeaux varietals. “It’s clear that the Napa Valley is a very fine area for Bordeaux varietals, probably better than any other area in the United States,” notes Peter Mondavi, Jr. “Five years ago, only 40 percent of our production was in red Bordeaux,” he adds. “Now it’s 65 percent, and the percentage will continue to rise.”

Krug also makes Chardonnay, some Sangiovese, and Sauvignon Blanc. Krug’s Napa Valley Winemaker is Jac Cole, who has extensive experience in Napa winemaking at Stags Leap Winery, Stag’s Leap Wine Cellars and S. Anderson.

 The 60,000 to 65,000-case Napa Valley line is now produced completely separately from the volume line. “We’ve created a winery within a winery to make Charles Krug wines,” says Peter Mondavi, Jr.

The new operation is organized for small-lot processing of the high-end wines with separate handcrafted winemaking and barrel storage. The company has also switched primarily from American to subtler French oak barrels and has acquired open-top fermenters for Pinot Noir and Sangiovese as well as adopting modern practices like extended maceration (soaking wines on the grapes).

Except for large storage tanks, the 700,000-case volume CK Mondavi line is largely invisible here in the winery. The wine itself is sourced partly from the family’s 1600 acres in Dunnigan Hills in the northwest Sacramento Valley, the rest from growers in Lodi and elsewhere. Part is custom crushed elsewhere.

Though the company has made major changes in its winemaking, its most visible changes are in the family’s 800 acres of vineyards in Napa Valley including the home ranch around the winery buildings just north of St. Helena. It also owns prime vineyards in Oakville, Yountville and Carneros.

It owns the prized Voltz and Slinsen Ranches just south of the Veterans’ Home against the Mayacamas Mountains. Its Willow Lake Vineyard in Carneros is in the area’s hilly northeastern region, slightly warmer than most of the appellation with shallower soils ideal for premium vines.

In the last year, Krug has prepared and replanted 200 acres using state-of-the-art soil preparation, drainage and irrigation techniques including laser-guided leveling. It has also augmented reservoirs and dug new wells; the existing vineyards were dry farmed without fixed irrigation.

The company was fortunate in not having to rush into replanting like so many other Napa wineries hit by the Phylloxera root louse. Krug benefited from Peter Sr.’s decision years ago to plant on old St. George rootstock rather than the trendy AXR-1 then used for 90 percent of Napa Valley’s vines. While the AXR was attractive to the bugs, they eschewed St. George so Krug didn’t have to rush into replanting. Many of the vines are no longer productive, however, and the firm is taking advantage of its five year reprieve to observe its neighbors and select optimum rootstocks and clones for replanting.

It is now replacing vines at the end of their useful life ? as well as varieties like Chenin Blanc and Riesling that are no longer popular and planted in the wrong spots. It is planting Merlot heavily in its Willow Lake vineyard in Carneros, for example, an area once thought too cool for Merlot but now recognized as optimum. It’s also replacing Riesling in Yountville with more suitable ? and popular ? Cabernet and Merlot.

The Mondavis expect to continue the replanting, which has involved pulling the last of venerable Chenin Blanc. Most visibly, it is replanting the Riesling vineyard in front of the winery with Cabernet. These grapes had been sold for the last few years; the winery dropped their production ? and that of Gamay Beaujolais, in 1995.

The whole process of upgrading ? particularly the replanting ? is very expensive. Peter Mondavi Jr. says the company has spent or committed $7.5 million to the process, but has fortunately been able to finance it through traditional means without selling out to others.

Some of the statistics from the first year of replanting 200 acres are telling: 22 miles of drain lines in only two vineyards. 9 million square feet of plastic sheeting. 6000 bales of hay for erosion control. 1841 miles of wire. 305,000 vines.

Today, the Charles Krug line consists of three tiers:

The Napa Valley brand typically sells in the low teens ands includes Sauvignon Blanc, Chardonnay, Pinot Noir, Cabernet Sauvignon, Merlot and Zinfandel. It also contains an Alexander Valley Zinfandel. Production ranges from under 2000 cases (for the excellent Sauvignon Blanc, made using the latest techniques from New Zealand) to 25,000 cases of Cabernet, still modest compared to many producers.

The Family Reserve wines include Chardonnay, Sangiovese, Merlot and a Meritage-type blend, Generations. Only a few thousand cases are made of each. Prices are just under $20 to mid-30’s for Generations. The winery also offers its venerable Vintage Selection Estate Bottled Cabernet, the flagship of the line in the $40’s, still a bargain compared to many Napa Cabernets.

Because of the recent replanting, the wines don’t yet reflect changes in grapes, but some do show improvements in winemaking. Though the wines are excellent now, it will be interesting to watch the new releases and compare them with the wines of the “old” Charles Krug.

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